Monday, April 30, 2007

Fiscal Opportunists

If Alan Essig is correct, Richardson, Cagle and Perdue are like a family with inadequate savings that just learned that they're getting a 5% raise. The family makes plans to spend all of it without replenishing their savings or taking into consideration the new baby that's on the way. What sense does that make? None, but it makes you feel good while you're spending it.

Essig just posted this article over at Georgia Political and Policy Digest. He makes a compelling argument that the $142 million the legislature wants to return to taxpayers really doesn't exist as a surplus, but instead is a product of fiscally irresponsible revenue projections of the part of the Governor. (Okay, Essig is far to polite to call the Governor irresponsible, but it's a reasonable interpretation.)

If you follow Essig's argument, it appears that the Governor sort of backed himself into a corner by over-estimating available revenue and failing to take into account the increased cost of public education due to population growth and the need to fully fund our surplus. Why would the Governor do such a thing? Perhaps to make room in the budget for his promised tax cut for high income seniors? Whatever his reason, Sonny's funny math has now bitten him in the political posterior.

Here's what happened. In January, the Governor raised the revenue estimates for 2007 from 1.8% over 2006 to 5.1%. In reality, revenues have only increased 4.7% in the first nine months of the fiscal year. Regardless, in the Supplemental Budget, the legislature proceeded to spend the projected revenues and did so without regard for the fact that those projections failed to take into account the needs in terms of the public schools and the State's savings account. Essig suggests that about $380 million ($180 mm for education and $200 mm for the surplus) should be hands off in terms of spending. But, as Essig points out, politics has once again trumped good policy.

I agree. I thought that fiscal conservatives were, well, fiscally conservative. Turns out they are just fiscal opportunists.

No comments: